Jumia, a leading e-commerce company in Africa, has announced that it will be exiting the food delivery business and focusing on physical goods e-commerce. The decision was made due to unfavorable economics in the food delivery market, where many players are losing money by offering discounts and promotions to grow market share.
The CEO of Jumia explained that the company’s logistics network is well-developed for physical goods e-commerce, with a mix of door delivery and pickup stations in many countries. This makes it harder for competitors to replicate this infrastructure. In contrast, the food delivery market has high barriers to entry, but also intense competition, which makes it difficult to sustain profitability.
To make up for the loss of customers and orders from exiting the food delivery business, Jumia plans to focus all its resources on physical goods e-commerce, where it sees clear potential for growth. The company is optimistic about its core categories, including phones and electronics, TV and appliances, home and living fashion, and beauty.
The decision by Jumia to exit the food delivery market may have significant implications for the African e-commerce industry, which has seen rapid growth in recent years. It also raises questions about the sustainability of food delivery businesses in Africa, where intense competition and unfavorable economics are prevalent.
Here are some key points from the article:
- Jumia exits food delivery business: The company will focus on physical goods e-commerce, citing unfavorable economics in the food delivery market.
- High barriers to entry for competitors: Jumia’s logistics network is well-developed for physical goods e-commerce, making it harder for new entrants to replicate this infrastructure.
- Intense competition in food delivery market: Many players are losing money by offering discounts and promotions to grow market share, creating unfavorable economics.
- Jumia optimistic about core categories: The company sees clear potential for growth in its core categories, including phones and electronics, TV and appliances, home and living fashion, and beauty.
